Skip to comments.Exxon, Big Oil Profits Evil Only Until You Weigh Their Tax Bills
Posted on 02/12/2009 8:16:42 AM PST by thackney
Last week, as a friend of mine and I were discussing the energy business, an acquaintance of ours came into the room. When told the topic of discussion, she immediately denounced Exxon Mobil. She'd just heard on the radio that the energy giant had had a record $45.2 billion profit in 2008. She was clearly hoping that we would join in her disgust.
I asked, "So are you suggesting that Exxon should not make money?" I went on, "Would you prefer that Exxon be like AIG, or Citigroup, or one of the big Wall Street outfits that's now asking for a government bailout?" That quieted her down. But I couldn't help myself. I asked, "Did you know that 52 percent of Exxon is owned by mutual funds, index funds, and pension funds?" No. Nor did she know that about 2 million individuals own Exxon stock or that company insiders hold less than 1 percent of the company.
The facts above are not meant to belittle my acquaintance. Rather, it's to illustrate an all-too-common problem in America: Voters have been conditioned to hate the energy business in general and Big Oil in particular. Americans love their gasoline, they love their cars, but they hate the oil companies....
According to the company's income statement, the amount of taxes it paid in 2008 was 2.5 times as much as its net profit. The $45.2 billion profit figure makes a snappy headline, but the $116.2 billion in taxes that it paid is relegated to a footnoteif that. Exxon's tax bill breaks down like this: income taxes, $36.5 billion; sales-based taxes, $34.5 billion; "all other" taxes, $45.2 billion. ...
(Excerpt) Read more at usnews.com ...
I remember Hillary wanted to take their profits and invest it in some clean green energy scam. I guess Obama wants to do the same.
After Porkulus passes, maybe Obama will then go after a politically popular target such as oil companies, and tax the heck out of them. In the minds of the enviro liberal folks, we don’t need oil companies anyway, because our future is all in solar energy and windmills.
Maybe the oil companies should stop selling products for about a month or two —— possibly the attitude of the socialists in Washington would shift a bit and lose some arrogance and operating impunity?
(Dragging them behind a motorcycle over a field of frozen corn stubble comes to mind)
Really? If they didn’t pay high taxes their profits would be “evil”?
ExxonMobile taxes will cover almost 15% of the welfare and pork bill of 2009. Liberals and their non-producer voters should send 116 billion thank you notes to ExxonMobile.
sales-based taxes, $34.5 billion;
Um..... is this not tax that the consumer pays attached to the price per gallon of gas? If so that is deliberately deceptive.
If so that is deliberately deceptive.
Why? It is part of the price at the pump that everyone compares and talks about.
please, nothing that harsh
I have a liberal gal pal who simply refuses to hear this information when we chat. Liberals are so narrow minded and limit their information gathering to ONLY their wacked-out sources.
You are right and it is an excellent point. It is like including all the state sales tax collections in the taxes Walmart “paid”.
People have no idea how really taxed the oil companies are.
Um.... ALL taxes that a corporation pays are ultimately paid by consumers in the form of higher prices per unit of good the corporation sells. Of course, Exxon has more business than just retail gasoline sales. So it pays sales taxes on assets that it acquires and consumable goods that it uses. It pays property taxes on its real assets. The bottom line is that all of the taxes that the corporation pays (even though some or all of those taxes are ultimately paid by the consumers) must be accounted for in its financial statements, and Exxon Corporation paid a total of 116.2 billion in taxes. If the 45.2 billion in profit was a record (which it was), I guess the 116.2 Billion in taxes was probably a record too.
It would depend on who is ultimately responsible for the taxes.
Most corporations paying estimated quarterly taxes. If so, then Exxon has to pay the estimated sales tax (I’m assuming, but could be wrong, that Exxon is the conduit for those sales taxes) on a quarterly basis, and since it’s estimated, it isn’t necessarily an accurate reflection of the taxes they collected. And, I know a corporation like Exxon doesn’t dare play fast and loose with estimated taxes. The IRS will kill you for underestimating those taxes.
Wouldn’t it be fair to say, that all Oil companies have to pay the same tax rate? Doesn’t seem fair that one oil company would be singled out.
Want to lower your taxes and maybe get a bailout?
The Government Accountability Office released a report today indicating that 83 of the 100 largest U.S. corporations including many that are benefiting from Washingtons many taxpayer-funded bailouts operate subsidiaries in countries known to be tax havens. Additionally, 63 of the 100 largest publicly-traded federal contractors have similar subsidiaries in the same spots, according to the report.
And that might not be all.
According to the GAO:
[T]he SEC only requires public corporations to report significant subsidiaries, so the number of subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions for each corporation or federal contractor may be understated in this report.
Browsing the list of companies, youll find many of the same names weve heard in recent months connected to federal bailouts. For example, American International Group, which was bailed out last year to the tune of roughly $150 billion, has 18 subsidiaries in eight tax-haven countries, including Bahrain, Switzerland and Bermuda, the GAO found.
Bank of America which received a $138 billion lifeline today, on top of $15 billion its already received under the Wall Street bailout (not to mention $10 billion injected into Merrill Lynch ahead of its acquisition by BoA) operates 115 subsidiaries in 11 tax-haven countries, including Gibraltar and the Cayman Islands.
The list goes on.
So what does it mean? Well, it appears that these corporations are begging for taxpayers to bail them out for the bad investment decisions they made, while at the same time skirting their tax obligations to the United States. (I say appears because the GAO concedes that subsidiaries may be established in listed jurisdictions for a variety of nontax business reasons. Still, for what other reason would Citigroup care to house operations on Aruba and the Isle of Man?).
Some lawmakers are asking the same question. Sens. Byron Dorgan (D-N.D.) and Carl Levin (D-Mich.), who requested the GAO report, plan to introduce legislation to shut down these tax dodgers, as Dorgan said in a statement:
This report shows that some of our countrys largest companies and federal contractors, many of which are household names, continue to use offshore tax havens to avoid paying their fair share of taxes to the U.S. And, some of those companies have even received emergency economic funds from the government.
The companies, in the past, have argued that the U.S. tax code is over-burdensome, forcing them to operate in tax havens to remain competitive. Levin points out that thats not always the case:
[N]ot all large U.S. companies are major tax haven users and there is great contrast between competitors. For example, Pepsi has 70 tax haven subsidiaries, while Coca Cola has 8; Morgan Stanley has 273, while Fannie Mae has 0; and Caterpillar has 49, while Deere has 3.
The lawmakers estimate that tax shelters cost the federal Treasury $100 billion each year
But recognize that all oil companies are not equal in their operations.
ExxonMobil actually buys more crude oil than they produce. Their refining throughput is more than twice their crude oil production.
Also most of these companies have varying amount of natural gas operations.
Different upstream versus downstream operations are going to have different taxing requirements.
A company like Anadarko is almost all upstream production, without refining or retail sales.